The supermarket sector is one of the most competitive in British retailing, with the top four constantly attempting to outdo each other with special offers, price comparisons and consumer ratings. However, while Tesco, Asda and Sainsbury’s have tended to post relatively successful sales figures of late, the same cannot be said for Morrisons.
For the last quarter, comprising of the three months to the end of November, Morrisons experienced a drop in like for like sales of 2.4 per cent excluding fuel sales. The chain believes that this is due to a significant lack of online presence, as it is the last supermarket brand in the UK yet to implement an online home delivery service.
However, things could soon change as Morrisons has now revealed that it will launch its online ordering service in the New Year. From January, customers will be able to conduct their weekly grocery shop online and have items delivered straight to their door, bringing the supermarket chain level with competitors for the first time in recent years.
Deliveries will first be offered in Warwickshire in order to assess demand and “trial run” the efficiency of the service before the initiative spreads to stores nationwide. It is hoped that 50 per cent of Morrisons customers will be able to take advantage of this additional service by the end of 2014.
As online grocery shopping is growing at a rate of around 16 per cent year on year, it is imperative that Morrisons acts quickly to avoid becoming obsolete in the supermarket sector. Yet an online service is not the only area in which Morrisons seeks to improve next year – convenience stores have become immensely popular with consumers, with a growth rate of around 20 per cent per year, and as such is a lucrative market for supermarkets seeking expansion.
In a statement, Morrisons blamed its lack of presence in these two areas for the last quarter’s poor performance, saying; “Consumer confidence remains subdued and we continue to see heavy promotional activity across the industry.
“As previously indicated, our low exposure to the sector’s key growth areas of convenience and online continues to impact the sales performance of the group.”
Morrisons’ “M local” convenience network has already begun to take root, with 36 new commercial property outlets having opened during the quarter. In total, there are now 69 M local stores in the UK, a figure which is expected to grow by around 100 in the 2014-2015 financial year.
While Morrisons insists that the past quarter’s figures were largely in line with expectations, many analysts were surprised that like for like sales fell by such a high amount. Hopefully the store’s acclaimed Christmas offering will allow the UK’s fourth largest supermarket chain to meet its full year targets and get 2014, and the changes it will bring, off to a strong start.
Do you think the problems identified by Morrisons are truly the root cause of the problems faced by the chain, or should bosses be analysing store offerings in order to better meet consumer demand?
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